Environmental Uncertainty and Innovation Performance †Free Samples

Question: Discuss about the Environmental Uncertainty and Innovation Performance. Answer: Introduction In the present business scenario, contemporary business organizations are opting for international business to expand their market share and increase the revenue turnover. With the help of globalization and technology advancement, entering in the global market has become easier than ever (Dunning, 2012). However there are few issues that are to be faced by the organizations in operating in the international market. Thus, it is important for the organizations in the global business to determine various factors which can affect their business potentiality. TechnologyOne is one of the leading organizations operating in the field of information technology. They are based in Australia and offering various software solutions to their clients. It is being founded in 1987 and they are currently enjoying the status of market leader in the Australian market (About Us | TechnologyOne, 2017). With having their home market and capital infrastructure are being established, it is the perfect time for them to enter in to the global market. China is one of the largest markets for the software providers across the globe due to the fact that it comprise of the leading organizations in the world. Thus, entering the market of China will be the effective target market for TechnologyOne. This report will discuss about the potentiality of TechnologyOne in entering the market of China. In addition, the competitive advantages of them and their probable competitors will be conducted to determine their potentiality. External environment will be analyzed for them in order to identify the key environmental challenges to be faced by them in the new market. Analysis of External environment External environment of the host country for TechnologyOne which is China will be evaluated with the help of PESTLE analysis. According to the pestle analysis, the first aspect to be considered is the political environment. The political environment of China is complicated yet stable (Jadhav, 2012). This is due to the reason that, China follows the autocratic communist form of government. Thus, the political environment is not liberal and democratic. However, the political structure of China is stable due to the fact that government of China is initiating various business friendly initiatives to attract foreign investments. Moreover, their initiation for generating innovations helped them to be the innovation hub for the world. The next aspect is the economical environment. The economy of the China is still in the developing stage; however, China is the leading developing countries in the world with having growth rate more than some of the developed countries (Bradley et al., 2012). Thus, TechnologyOne will have huge opportunities in effectively operating their business in the Chinese market. However, on the other hand, challenges will be there for them regarding the strict regulations of the Chinese government. The next factor is the social environment. China is having the huge population in the world and they are driven by innovations and technology (Oke, Walumbwa Myers, 2012). Moreover, availability of the cheap and skilled employees will help the organization in effectively setting up their operation facility in China. Technological environment is the next aspect to be considered. As discussed earlier, China is one of leading countries in terms of technologies. Majority of the latest technologies and inventions are being initiated there. Thus, TechnologyOne will have the access of latest innovations and technologies. The next factor is the environmental factor. China is having some of the most stringent policies regarding the environment and climate change. However, it will not directly affect the business potential of TechnologyOne due to the fact that emission of pollutants is not relative with their operations. However, China is the largest emitter of pollutants and thus it may have adverse effect in their business in the long term. The last aspect to be considered is the legal environment. China is having stable and effective legal structure and system with having business and investment friendly legislations (Chow, 2015). However, there are instances and criticisms generated in the past regarding their legal systems and policies. Thus, being a foreign investor, it should be well considered by TechnologyOne before entering the market of China. Market analysis Chins is currently leading the world in the field of information technology. There are a few reasons behind their leadership status. One of the key reasons is the development of technologies and innovations in rapid rate (Orr Roth, 2012). In the current business scenario, China is known as the innovation hub of the world. Another key reason is the availability of the cheap and skilled employees and other resources. It is being estimated that the information technology industry in china will be leveraged further by the initiation various global organizations in China. Thus, the market for the new software solution is rising which is good opportunities for TechnologyOne. However, one of the key challenges that TechnologyOne will face in the Chinese market is the presence of various leading and established organizations offering software solutions. This is due to the reason that China is having huge number of skilled employees which are being available at a lower cost (Varma, 2013). Moreover, China is also the hub for global outsourcing of jobs from the developed countries. This factor also motivated several organizations in having their software development center here in China. Thus, the competition for TechnologyOne is more intense in the Chinese market than on the Australian market. The major competitors in this market are the Software AG, Actio, Hartung and Instem. The key competitive advantages of these organizations are the cost effectiveness and wider audience (Wagner III Hollenbeck, 2014). These organizations are leveraging the opportunity of low employee cost and driving innovation to the fullest. Moreover, they are catering to wider audien ce compared to TechnologyOne. On the other hand, the key competitive advantages for TechnologyOne are their retention rate of the customers. According to the data available, the customer retention rate of TechnologyOne is 99 percent. Thus, it will help in generating positive word of mouth from the existing customers (Khan, 2012). Moreover, their customer list comprises of various government institutions which is a good evidence of their service reliability. All these factors will help them in tapping in the Chinese market more effectively. Probable challenges With having huge opportunities in entering the market China, TechnologyOne will also may face various challenges and issues that can be generated from their international business. One of the key probable issues is determining the cultural aspect of the host country (Kraidy, 2017). In the case of TechnologyOne, the cultural environment in their host country and home country is quite different. In addition, the political structure and system of both the country is also different. Thus, it will be a challenge for them to effectively adhere to the different rules and regulations. Management of the human resource may also face some issues due to the difference in culture of two countries (Stahl, Bjorkman Morris, 2012). Thus, organizational cultures that are viable in the Australian region may not get succeed in the Chinese market. The requirement of the Australian and Chinese employees is different and it will be a challenge for the organization to effectively meet the diversified requi rement in the global market. The choice of the entry mode should also be taken accurately by TechnologyOne in entering the market of China. This due to the reason, that a huge financial risk is being involved in entering the market of a new country (Laufs Schwens, 2014). Thus, TechnologyOne should consider the effective entry mode strategy to enter the Chinese market. It can be recommended that, the most effective entry mode strategy for TechnologyOne will be the joint venture. This is due to the reason that, in the case of joint venture, the business risk involved with them will get reduced and will be divided among the participating organizations (Ertug et al., 2013). In addition, the domestic organization in the joint venture will have the more knowledge about the local market than that of TechnologyOne. Thus, it will help them in effective determination of the market requirement. In the international business, entering in the foreign country will not only help the organization in gaining the market share and setting up the business there. Determination of the partners in the organization such as suppliers should also be effectively accomplished (Tang, Yang Wu, 2016). This is due to the reason that, in the foreign country the effectiveness and the approach of the partners will be different compared to the home country. Thus, TechnologyOne should determine the sourcing of their resources before setting up their operations in the Chinese market. Thus, TechnologyOne will face challenge in sourcing the suppliers and other raw materials for their operations in China. International political relationship is also an important factor to be considered by the organizations entering in the global business. This is due to the reason that, the political relationship between the home and host country of the particular organization should be favorable enough in order to effectively promote the business potential of the organizations (Dunn, 2016). In case of TechnologyOne, the relationship between the Australia and China will be a determining factor for their outcome of their business. If the relationship between the two countries gets degraded then it will have adverse impact in the business performance of them. It may influence the Chinese government to impose sanctions on the Australian organization which will create obstacles in the business operation of TechnologyOne. Thus the risk of international political scenario is also applicable for them. Competitiveness of TechnologyOne Having analyzed the external environment of the host country of TechnologyOne along with identifying the probable issues that may be faced by them, it is the time to determine the competitiveness of TechnologyOne in operating their business in the foreign countries. SWOT analysis will be done to identify the strengths and weaknesses of them. The strength of TechnologyOne includes the customer loyalty. As discussed earlier, the retention rate of TechnologyOne is 99 percent. Thus, the existing customers are highly satisfied with their solutions. It will act as competitive advantages in attracting the existing customers. Another strength being identified is their establishment in the Australian market. They are currently leading the market in Australia and thus it will provide them the necessary push by having access to the resources in setting up the operation in the foreign market. Market share of TechnologyOne outside the Australian region is less and they do not have global existence. Thus, the brand value of them is limited to the Australian region only. It will create barrier in developing their market in the new regions. Another weakness of them is the pricing strategy. TechnologyOne is not known for their price effectiveness unlike the other software solution organizations from the developing economies. Thus, this will not make them to stay ahead in the competition. Moreover, in the market like China, price is an important factor to be considered. The growth rate of the global information technology sector is positive and is increasing rapidly. Thus, in the global market, TechnologyOne is having huge opportunities to grab. In the current business scenario, more and more organizations and institutions is going digital and technology friendly which further increasing the requirement for the digital solutions. Thus, the market for them is growing. Adhering to the different and diverse regulations in the global market is a big challenge for them in operating in the international market. Entry of the competitors from the developing economies which are providing more cost effective services are gaining more market share. Another issue being identified is the increase in the cost of production which will further increase the cost of the service. Conclusion Having discussed the external market situation of TechnologyOne in operating in the Chinese market, it can be concluded that they are having huge opportunities in entering the market of China. However, there are various issues also being identified which may be faced by them. Thus, it is important for them to overcome these challenges effectively in order to grab the opportunities. The competitiveness of TechnologyOne are also been analyzed here in this report. It shows that they have certain threats and weaknesses in their way which however can be overcome. 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